Baltic
Dry Index. 1445
+32
Brent Crude 63.43
“I
never lost money by turning a profit.”
Bernard
Baruch.
With
most Americans to busy shopping today, and most Europeans to busy
being the western European version of the old dead USSR, market
attention turns to what’s going on in Chinese markets, and will it
spill over into other markets next week?
It
all probably comes down to at what point the authorities in Beijing
want to step in and resume rigging their market. Right now that’s
anyone’s guess, but having only just started reigning in financial
excess and risk in China’s bond market, my guess is that Beijing
will be willing to let the process run on for a few more weeks. That
probably means that it does spill over into other markets, though
probably without triggering a crash. But with US and other markets
already in bubble state and running on thin air, it doesn’t take
much for a stumble to turn into a rout, especially if the central
banksters are serious about normalising interest rates next year.
The
specs have to ask themselves, at least those not just computer driven
algo traders, at what point do I want to lock in 2017s profits?
November
24, 2017 / 12:49 AM
Asian shares off 10-year peak, China hits three-month low
TOKYO
(Reuters) - Asian shares hovered below their 10-year peak on Friday
while mainland Chinese shares dropped to three-month lows after big
falls the previous day on concerns about fresh government steps to
curb financial risks and an ongoing rout in the Chinese bond market.
Otherwise,
markets lacked cues from Wall Street, which was closed for the
Thanksgiving holiday in the United States on Thursday, and was set to
hold a shortened trading session on Friday.
MSCI’s broadest index of
Asia-Pacific shares outside Japan was almost flat, as Hong Kong
shares bucked the softness in the mainland shares to gain 0.6
percent.
The
MSCI index hovered still just 0.5 percent below its 10-year peak hit
earlier this week and is on course to post a weekly gain of 1.4
percent.
Japan’s Nikkei fell 0.3 percent
after a market holiday on Thursday while U.S. stock futures were
little changed after shortened trading on Thursday.
“Many markets have been hitting new
highs so there should be some profit-taking and I wouldn’t worry
too much. Still, in the very near term, we could be in a phase where
patience is needed,” said Hirokazu Kabeya, chief global strategist
at Daiwa Securities.
Although solid global economic growth
and strong corporate earnings have underpinned shares in Asia and
many other parts of the world, a tumble in mainland Chinese shares
caught some investors’ attention.
The
CSI300 index fell as much as 0.9 percent to a three-month low in
choppy trade after a 3.0 percent fall - its biggest in almost a
year-and-a-half - on Thursday, as a sell-off in domestic bonds that
has been underway since last month gnawed away at investor sentiment.
More
Chinese Stocks to Remain Under Pressure After Rout, Analysts Say
Bloomberg News
November
24, 2017, 1:59 AM GMT Updated on November 24, 2017, 3:47 AM GMT
Chinese
shares continue to reel after their worst day in more than a year,
and the pain is likely to persist as liquidity conditions tighten.
Credit Suisse Group AG analyst Li
Chen is among those blaming bond market volatility for the sudden
turmoil in equities, warning that fixed-income rates are
likely to remain elevated for the rest of this year, the day after a
gauge of large-cap A shares plummeted the most since June 2016.
“The rising rates make A shares
less attractive to banks and insurance institutions, and also give
some investors legitimate reasons to take profits now,” Chen wrote
in a note Friday.
Yields
on sovereign and top-rated local corporate debt have climbed amid
Beijing’s deleveraging campaign, which includes plans to tighten
supervision of asset management products. The 10-year yield on
China Development Bank debt this week exceeded 5 percent for the
first time since 2014, while that on similar maturity government
notes topped 4 percent.
“The mid-to-small financial
institutions that have not yet met the deleveraging standards, under
the newly published asset management rules (at year-end when
liquidity is relatively tight) have to sell off the bonds they hold,”
Chen said.
Index Levels
Mainland markets dipped further on
Friday, with the CSI 300 Index of large cap stocks dropping 0.6
percent as of 11:14 a.m. local time. The gauge tumbled 3 percent
Thursday, with most of the losses coming in the last hour of
trading.
Even with Thursday and Friday’s
losses, the CSI 300 Index has climbed 23 percent this year.
State-backed funds, the so-called national team, don’t appear to
have stepped in to stabilize the market, though that could change if
the selloff continues, said Hong Hao, chief strategist at Bocom
International Holdings Co.
He said authorities may intervene to
avoid excessive moves, though the market should be allowed to find
prices free of interference. “The bond market is the more critical
issue, the central bank could ease liquidity a bit if they want to
stop the rout,” he said.
More
China Bank Profits Face Squeeze From Tighter Rules, Fitch Says
Bloomberg News
November
24, 2017, 3:19 AM GMT
Profit
margins at Chinese banks will be squeezed next year and credit growth
is likely to slow as increasing regulation eats up capital, Fitch
Ratings said.
The lending businesses of the
country’s smaller banks face the most pressure and they will rely
more on larger state-owned rivals for liquidity, the ratings company
said in a statement
Friday. At the same time, the shadow-banking sector, which one
brokerage
values at about $19 trillion, will attract even more regulatory
scrutiny in 2018, Fitch said.
Chinese regulators are sweeping
through the country’s $40 trillion financial sector in a bid to
contain risk after total debt ballooned to about 260 percent of the
size of the economy. In the past week alone, they’ve proposed rules
governing returns from asset-management
products, laid out limits
on bank shareholdings and unveiled a purge
of cash micro-lenders.
“Credit
growth is likely to decelerate next year, given the tighter
regulatory stance,” Fitch said. “Funding conditions are likely to
remain tight, pointing to continued margin pressure at smaller banks
which rely more on non-deposit funding.”
The predictions from Fitch and S&P
Global Ratings on Thursday suggest the cost of the system-wide
measures will be sluggish profit growth at domestic banks, which
include Industrial
& Commercial Bank of China Ltd., the world’s largest by
assets.
New rules pushing shadow-banking
items back on to lenders’ balance sheets will lead to an increase
in risk that could weigh on bank capital, Fitch said. Net income
growth in the banking sector will remain in the “low single digits”
in 2018, it said.
The ratings company kept its outlook
on Chinese banks at stable, saying sovereign support for the sector
remains “very strong.”
“Men,
it has been well said, think in herds; it will be seen that they go
mad in herds, while they only recover their senses slowly, one by
one.”
Charles
Mackay. Extraordinary Popular Delusions and the Madness of Crowds.
Crooks and Scoundrels Corner
The
bent, the seriously bent, and the totally doubled over.
Today
classic understatement on Zimbabwe from the IMF.
November
23, 2017 / 8:09 AM .
Zimbabwe's economic situation 'very difficult' - IMF mission chief
Reuters Staff
JOHANNESBURG (Reuters) - Zimbabwe’s
economic growth is threatened by high government spending, an
untenable foreign exchange regime and inadequate reforms, a senior
International Monetary Fund (IMF) official said.
Zimbabwe
was once one of Africa’s most promising economies but suffered
decades of decline as former President Robert Mugabe pursued policies
that included the violent seizure of white-owned commercial farms and
money-printing that led to hyperinflation.
Mugabe, 93, resigned on Tuesday after
nearly four decades in power following pressure from the military,
the ruling ZANU-PF party and the general population.
New
ZANU-PF leader Emmerson Mnangagwa is expected to be sworn in as
Zimbabwe’s president on Friday.
Zimbabwe
has not been able to borrow from international lenders since 1999
when it started defaulting on its debt, and has $1.75 billion rand in
foreign arrears.
“The economic situation in Zimbabwe
remains very difficult,” Gene Leon, IMF’s mission chief for
Zimbabwe said in a statement to Reuters late on Wednesday.
“Immediate action is critical
to reduce the deficit to a sustainable level, accelerate structural
reforms, and re-engage with the international community to access
much needed financial support.”
Leon said Zimbabwe should resolve
arrears to the World Bank, African Development Bank and the European
Investment Bank, among other reforms, for the IMF to consider future
financing request from the country.
Zimbabwe should also be ready to
implement strong macroeconomic policies and structural reforms to
restore fiscal and debt sustainability, Leon said.
“Three
causes especially have excited the discontent of mankind; and, by
impelling us to seek remedies for the irremediable, have bewildered
us in a maze of madness and error. These are death, toil, and the
ignorance of the future..”
Charles
Mackay. Extraordinary Popular Delusions and the Madness of Crowds.
Technology Update.
With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?Could Tesla Power Its Electric Truck With Solar Panels?
11.21.17
Tesla just keeps making cool things.
On the top of the list is its newest addition to the lineup, an
all-electric
semitruck. Oh, that might sound like a dumb idea—but I don't
think so. Just consider how much stuff is shipped back and forth
across the country. Clearly a train would be more efficient, but
trucks also play a large role. It seems like the Tesla
semi might be able to make two improvements over a traditional truck.
First, the electric truck will clearly reduce
emissions (depending on the energy source to charge these
things). Second, with more onboard automation it is likely these
semis will be significantly
safer than their diesel counterparts.
But what if the Tesla semi also had
solar panels? Elon Musk already has a whole
company devoted to solar energy—why not just combine and
conquer? Tesla and SolarCity are already teaming
up to make solar panels, home batteries, and electric cars a
unified energy system. Wouldn't slapping some solar panels on top of
this truck's surface area make the thing more efficient? You can only
learn by trying—so I'm going to estimate the effect of solar panels
on the roof of the trailer.
How Much Power from the Roof?
How much power and how much energy
(those are two different things) could you get from solar panels on
the trailer? First, I guess I should point out the difference between
power and energy. Power is the rate that you would get energy from
the sun. At the surface of the Earth, the light from the sun produces
about 1,000 Watts per square meter. In terms of energy, this is 1,000
Joules every second (assuming the panels are 100 percent
efficient—which they're not).
The average power a solar panel
produces depends on several things. Bigger solar panels provide
greater power (that seems obvious). But it also depends on the
efficiency and the angle at which the sunlight hits the panel. The
best panels [available today are around 20 percent
efficient](https://en.wikipedia.org/wiki/Solar_panel, and they work
best when the light hits perpendicular to the panel.
Using those assumptions, let's get
some values to estimate power for a solar semi.
First, I need to estimate the size.
I'm going to say that the solar panel covers the entire top of a
standard semi trailer. Since there are apparently
different standard sizes of trailers, I am going to say this one
is 2.6 meters wides and 15 meters long for a total area of 39 square
meters. Second, I need both the time and average incident angle for
the sunlight. I am going to use a time of 8 hours at 60 degrees from
vertical. This is obviously an oversimplification of the problem, but
good enough for a rough estimate. Oh, also I will use the efficiency
of 20 percent.
More
Another
weekend and the Great Christmas Shopping Rush to buy mostly Asian
made tat, shifts up a gear. Thankfully your editor, writer, and
general busybody and his dog Rosie, are mostly immune to the national
December obsession with shopping. Rosie and I will mark the weekend
with the purchase of a bottle of Tanqueray to celebrate turning 68 on
Sunday. Naturally, I will not share any of this precious liquid with
poor Rosie.It's for her own good, you understand. Have a great weekend everyone.
“Well,
very long ago, on the spot where the Wild Wood waves now, before ever
it had planted itself and grown up to what it now is, there was a
city - a city of people, you know. Here, where we are standing, they
lived, and walked, and talked, and slept, and carried on their
business. Here they stabled their horses and feasted, from here they
rode out to fight or drove out to trade. They were a powerful people,
and rich, and great builders. They built to last, for they thought
their city would last for ever.”
Kenneth
Grahame. The Wind in the Willows.
The monthly Coppock Indicators finished October
DJIA:
23,277 +233 Up.
NASDAQ:
6,728 +284 Up.
SP500:
2,575 +183 Up.
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